I.          Objectives:

This Order is issued to streamline the processing of the tax treaty relief application in order to improve efficiency and service to the taxpayers.

Furthermore, it is to the best interest of both the taxpayer and the Bureau of Internal Revenue that any availment of the tax treaty provisions be preceded by an application for treaty relief with the International Tax Affairs Division (ITAD). In this way, the consequences of any erroneous interpretation and/or application of the treaty provisions (i.e., claim for tax refund/credit for overpayment of taxes, or deficiency tax liabilities for underpayment) can be averted before proceeding with the transaction and or paying the tax liability covered by the tax treaty.

II.         Coverage:

This Order covers exclusively applications for tax treaty relief, including claims or requests for tax exemption, preferential tax treaty rate, refund or credit of taxes on the following income derived or to be derived by the taxpayer under existing tax treaties, to wit:

a. dividends	f. salaries, compensation, etc
b. interests	g. income from services (entertainment, profession,tc.)
c. royalties	h. profits from the operation of ships and air carriers
d.business profits	i. all other income covered by tax treaties
e. gains from sale of shares of stocks

III.        Policies:

In order to achieve the above-mentioned objectives, the following policies shall be observed:

1.  The processing for tax treaty relief shall be transferred from Law Division to the International Tax Affairs Division (ITAD) in accordance with the approved memorandum dated March 23, 1999.

2.  Any availment of the tax treaty relief shall be preceded by an application by filing BIR Form No. 0901 (Application for Relief from Double Taxation) with ITAD at least 15 days before the transaction i.e. payment of dividends, royalties, etc., accompanied by supporting documents justifying the relief. Consequently, BIR Form Nos. TC 001 and TC 002 prescribed under RMO 10-92 are hereby declared obsolete.

3.  Claims for tax credit/refund pertinent to the tax treaty relief requested filed with ITAD within the two (2) year period prescribed by Section 229 of the NIRC, as amended under RA 8424. The Tax Credit Certificate for this purpose shall be issued for the account of the "non-resident taxpayer/recipient of the income".

IV.       Procedures:

The following procedures are to be observed in the processing of the tax treaty relief application:

1.  Taxpayer

1.1    Accomplish the new BIR Form 0901 - Application for Relief from Double Taxation.

1.2    File BIR Form 0901 with ITAD at least 15 days before the transaction i.e. payment of dividends, royalties, etc., with all the supporting documents justifying the relief sought.

1.3    Attach to the Withholding Tax Return Form 1743W/new computerized BIR Form 1601 (covering the final withholding taxes based on the preferential tax treaty rate for income payments to non-residents), a copy of the accomplished BIR Form 0901 duly acknowledged/received by ITAD, or when available, the approved ruling as proof of the availment of the preferential tax treaty treatment.

2.      ITAD

2.1    Check completeness and validity of documents submitted.

2.2    Review the application and/or determine whether the applicant is entitled to the tax relief or tax refund/credit requested.

2.3    In case of claims for tax credit/refund, verify with the Revenue Accounting Division the remittance of applicable taxes, and with the Collection Division of the respective Revenue Region for any outstanding tax liabilities of the concerned taxpayer.

2.4    Prepare the necessary documents such as ruling, letter, memorandum, disbursement vouchers if applicable, for approval by the Commissioner or his duly authorized representative.

2.5    In the case of tax refund, indorse the Disbursement Voucher and the certified copy of the ruling, both approved by the Commissioner, to the Chief of the Accounting Division for the payment/processing of tax refund. (The payee/claimant in the Disbursement Voucher shall be in the name of the non-resident taxpayer/recipient of the income.)

2.6    In the case of tax credit, forward to the Appellate Division the indorsement memo together with the certified copy of the approved ruling for the issuance of a tax credit certificate.

2.7    Release to the taxpayer concerned the original copy of the approved ruling and/or duly signed tax credit certificate immediately upon receipt thereof.

2.8    Notify the competent authorities of the countries of residence of taxpayers availing of the tax treaty provisions, if necessary.

3.      Appellate Division

3.1    Issue the tax credit certificate upon receipt of indorsement memo from ITAD recommending the issuance of such. The tax credit certificate shall be issued in the name of the withholding agent for the account of the "non-resident taxpayer/recipient of the income".

3.2    Forward the duly signed Tax Credit Certificate to ITAD for release to the taxpayer/applicant concerned.

4.      All audit offices and units in the National Office, Regional Offices and the District Offices

4.1    Notify ITAD of any tax treaty relief availment by taxpayers not covered by any application/approval within fifteen (15) days from discovery, by forwarding a report of tax treaty relief availment. (Please refer to Annex C for the report format.)

V.        Repealing Clause:

This Order revokes RMO No. 10-92 dated February 01, 1992 and amends all other issuances and portions thereof inconsistent herewith.

VI.       Effectivity:

This Order takes effect immediately.

Adopted: 25 Nov. 1999

(SGD.) BEETHOVEN L. RUALO
Commissioner of Internal Revenue